Transnet Distances Itself From SAP Payments for State Deals

Updated on
  • S. African state, ports operator wasn’t aware of commissions
  • CEO says Gupta-related allegations are a matter for SAP

Transnet SOC Ltd. distanced itself from third-party payments made by software giant SAP SE to win contracts with South Africa’s state-owned ports and rail operator, saying they are an issue for the German company and its business partners.

“Transnet has no knowledge of the arrangement between SAP and the people it paid commission to,” Chief Executive Officer Siyabonga Gama told reporters in Johannesburg on Monday. “The preliminary view is that it’s a matter between SAP and the people it paid.”

SAP said last week it transferred 94 million rand ($6.7 million) to companies linked to the Gupta family, who have been accused of using political connections to win state contracts and influence the appointment of cabinet ministers. In return, the Walldorf-based company received assistance in winning contracts with Transnet and state utility Eskom Holdings SOC Ltd., it said. The Guptas deny wrongdoing.

SAP found no evidence that payments were made directly to Transnet officials, and Gama said third-party commissions weren’t part of contracts between the two companies.

“They have a commission structure that’s nothing to do with Transnet,” he said in an interview. “There’s no employee of Transnet who was involved in this.”

U.S. authorities including the Department of Justice are investigating SAP’s business in South Africa. Allegations of corruption surrounding the Guptas have also embroiled auditor KPMG LLP and consultant McKinsey & Co., which have both said work in the country has been sub-standard. SAP’s own investigation into the third-party payments is ongoing, with law firm Baker McKenzie expected to conclude its probe into Transnet and Eskom contracts by the end of the year.

Gama was speaking as Transnet reported an 18 percent increase in first-half earnings before interest, taxes, depreciation and amortization to 16.3 billion rand. Sales rose 14 percent and freight volumes gained 7.9 percent.

The company said borrowings increased by 1.2 percent to 124.8 billion rand as of end September, when compared with six months earlier. Transnet is operating within loan covenant requirements and has “enough headroom” to borrow more, the CEO said.

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